Bank Alfalah is a commercial bank that is owned by the Abu Dhabi Group. In Pakistan, Bank Alfalah became functional in the twelvemonth 1997. Initially it started working as a populace limited company under the Companies Act 1948. In the same twelvemonth, in the month of November, it started working as a bank.
APresently there are 347 subdivisions of Bank Alfalah in 75 different metropoliss of Pakistan. Out of these, 162 subdivisions are reserved for Islamic banking and the remainder of them cover with commercial banking. The head office of Bank Alfalah is located in Karachi.
Bank Alfalah ‘s vision is “ To be the premier organisation runing locally & A ; internationalism that provides the complete scope of fiscal services to all sections under one roof ” .
Mission of Bank Alfalah is “ To develop & amp ; present the most advanced merchandises, pull off client experience, deliver quality service that contributes to trade name strength, establishes a competitory advantage and enhances profitableness, therefore supplying value to the stakeholders of the bank ” .
Functions and Servicess
Branch banking, which includes sedimentations, remittals, foreign trade, cabinets etc.Consumer banking, which includes car loans, recognition cards, place loans, consumer durable goodss etc.Electronic banking, which includes telephone banking, online banking, ATMs etc.Corporate banking, which includes the installations and services such as short/long term finance, trade finance, structured finance etc.
Treasury & A ; Investment that includes services such as money market, forex market, investing, authorities securities, letter writer banking etc.
STRATEGIC ANALYSIS OF BANK ALFALAH
External Market Analysis
Industry Profile: Pakistan ‘s banking sector has witnessed some troubles in the past, but was able to last the impact of weakening macroeconomic basicss since 2007. However, recent black inundations will hold serious deductions for macroeconomic stableness and on growing chances. Though, even before the inundations, the macroeconomic conditions and mentality were looking weak, the overall sector is good placed to defy modest dazes.
Competition: The competition in banking sectors is low as Bankss have formed trust.Foreign Demand: Foreign demand does non use to Bank Alfalah. Bank Alfalah is an international bank ; it has subdivisions located in different states but it does non run on planetary graduated table i.e. Each state has its ain caput one-fourth and policies.Industry ‘s Long-run Prospects: The industry is go throughing through a transitional period from long established forms and norms to the unknown land of menaces and chances. To alter every bend into an chance will distinguish the banking organisations.
A strong and efficient compensation system is a good chance to make a competitory advantage.Labor Market Assessment: The labour force tendencies have direct deductions for compensation pattern. In banking sector there is higher labour supply as compared to demand because current tendency among people is acquiring occupation in banking organisations and the market is flooded with Post Graduates holding MBA.
So, Bank Alfalah does non hold to be concerned about its compensation policy.
Internal Market Capabilities
Functional Capabilities: Keeping the competitory advantage is important for every organisation. In banking sector this can be maintained by engaging knowing employees and retaining them. An effectual compensation system is a cardinal to retain employees that are most good for the organisation.
The compensation system of Bank Alfalah is efficient and effectual. They have developed techniques and tools to honor employees. ( mentioned and discussed subsequently in the study )Human Resource Capability: Bank Alfalah is staffed with knowing and productive employees.
Employees are rewarded often and reasonably. Employees by and large know in progress about the compensation and the public presentation ends. Every employee has to establish a undertaking every twelvemonth and at the terminal of the twelvemonth his/her public presentation is evaluated and wagess are given on the footing of their public presentation. ( Shabbir, 2010 )Fiscal Condition: Fiscal status of Bank Alfalah is strong and stable. Bank Alfalah is a undertaking of Abu Dhabi Group that allows the bank to put in advanced and effectual engineering in order to widen the scope of its services and merchandises.
Sound fiscal status enables Bank Alfalah to run into operational and capital demands. Employee wage is revised yearly and inducements are given recurrently based on their public presentations. ( Shabbir, 2010 )
EXISTING COMPENSATION MANAGEMENT SYSTEM IN BANK ALFALAH
Job listing is done largely through newspapers in which a basic overview of the needed accomplishments and experience every bit good as the figure of places for appliers is given. The newspaper advertizement is first sent to the compensation section which conducts a profit-loss analysis of its impact. The advertizement is merely published if the compensation section gives it the go in front.
Groups of Job
Jobs that exist throughout the bank subdivisions are categorized on the footing of similar features and are grouped under the same occupation household. The occupation descriptions are relevant to the undertakings involved instead than the individual making the occupation.
The public presentation rating Judgess how good the individual was able to execute the undertakings designated harmonizing to the occupation description.
Bank Alfalah uses nine wage ranges for employee compensation. Pay is offered to employees in the same occupation or class from within that wage scope. A wage scope consists of a minimal and maximal wage and a center. The center is normally considered to be the market rate for an effectual performing artist in a given occupation.
The advantage of this scope system is that an employee ‘s wage can change within the scope.Employees who are paid center rate will hence be freshly appointed, undergoing preparation, in plentiful supply, or classified as less than effectual performing artists. Employees who are paid above the center, conversely, will be experienced, extremely skilled, in short supply, and rated as high performing artists.Salary scopes can be distinguished from incremental graduated tables by the fact that they do non dwell of a series of fixed stairss ; existent wages can be set at any point between the lower limit and maximal points, and hence directors have greater discretion in make up one’s minding what an person ‘s wage will be.Bank Alfalah follows the senior status based wage system every bit far as publicities are concerned.
Employee publicity occurs every 2 old ages depending upon the figure of employees in that unit every bit good as public presentation of the employee.Pay classs are helpful in positioning the employees in above mentioned wage scopes. The organisational hierarchy of Bank Alfalah is flatter which depicts that there are wider wage classs.
Basic Salary, Gratuity and Provident Fund Deduction
The expression used for basic salary computation by Bank Alfalah isBasic salary = 0.607 * gross wageProvident fund tax write-off takes topographic point every month which is calculated asProvident fund tax write-off = .0866 * Basic wageThe Gratuity Act, 1972 came into force with consequence from 16th September, 1972 and provides regulations of payment of tip to all employees irrespective of their cadre/scale. The tip as per this act is collectible to all employees/officers in the event of their old-age pension, retirement, surrender, decease, discharge on the evidences of entire disability due to an accident or a disease. Minimum uninterrupted service of non less than 5 old ages is required so as to entitle an employee for tip except where the expiration of employment of any employee is due to decease or disability.
Quantum of tip collectible under the Act is 15 twenty-four hours rewards based on the rate of rewards last drawn for each completed twelvemonth of service or portion thereof, in surplus of 6 months ; capable to ceiling on quantum of sum fixed by the authorities from clip to clip ( which has been enhanced from Rs.3, 50,000/- to Rs.10, 00,000/- with consequence from 24th May, 2010 ) .
Bank Alfalah follows the tip act as per authorities Torahs and ordinances and is apt to supply its employees tip after completion of 5 old ages employment with Bank Alfalah but employee must carry through other conditions every bit good to obtain tip.
Employees that are hired are given a basic lineation of their occupation description, it is a requirement that they add undertakings and assignments to that occupation description for themselves every twelvemonth so as to last and come on in the organisation.
Observation and interview are two methods that are pattern by Bank Alfalah for occupation analysis.
Interviews are conducted by directors to cognize the responsibilities and public presentation of employee.
Appraisals Approaches Adopted by Bank Alfalah
There are two types of assessment attacks adopted by bank Alfalah ; traditional attack and modern attack.Traditional Approach: This attack of assessment is about the overall organisation, on the footing of their past public presentation. In Bank Alfalah, it is reviewed at subdivision degree.
Each subdivision is responsible to demo its public presentation in conformity to the set ends in a positive way.Modern Approach: In this method the employees are allocated certain ends or marks to be fulfilled in the given period, which show the overall public presentation of each employee e.g. they are asked to roll up the sedimentation of certain sum in the prescribed period. Bank Alfalah has developed their ain public presentation direction procedure which is performed biannually in the months of June and December.
It is done with the consent of both director and subsidiary. Manager conducts 30 proceedingss interview with his subsidiary to discourse about his undertakings and rates him harmonizing to appraisal signifier established at the start of the twelvemonth. Employees are cognizant of these rating standards at the start of the twelvemonth so that they can better public presentation harmonizing to standards set by the bank.This public presentation direction procedure differentiates the employees as following three classsPartially executingPerformingExcelingIf an employee does non accomplish his ends in given period, he would be rated as partial a executing employee.
If an employee completes his work in the given clip he would be rated as a executing employee.If an employee is making the work designated to him every bit good as demoing concern for other undertakings, he would be rated as an stand outing performing artist.After the public presentation direction procedure, employees who lie among the acting and stand outing rank are given fillips and merely stand outing employees are given public presentation fillips as for their good public presentation.
These are given to appreciate employees and to actuate partly executing and executing employees. After the completion of rating procedure director discusses it with employees.Time direction is another procedure adopted by Bank Alfalah to detect the employee ‘s public presentation. Employees are required to finish their work harmonizing to distinct clip lines.
ASSESSMENT OF EXTERNAL AND INTERNAL ENVIRONMENT
Following are the external and internal environment factor for Bank Alfalah.
Bank is in its growth phase so there is good fiscal place.Professional and committed work force.
Well experient and choice staff.Efficient internal communicating system.Expansion in Islamic banking.
Although the bank is turning but it has some failings which it should take to do itself even stronger.The work force is non satisfied with the salary construction.The bank gives its work force less benefits as compared to other Bankss.Communication spread between employee and direction doing instability in work and increasing occupation insecurity.
Extension of international web of the subdivisionsTurning market.
Uncertain economic conditions.Actions taken by rivals.
IDEAL COMPENSATION SYSTEM
Human resource is the cardinal component of any organisation.
It is responsible for all the work and its consequence. Employees should be motivated and pre-arranged decently so that they can give the best end product and compensation as per the industry rules. Compensation is the payment received by an employee in the return for hisher function in the organisation. It is a controlled pattern that involves harmonising the work-employee relation by supplying pecuniary and non-monetary reimbursement to employees.
Compensation systems are made maintaining in position the tactical ends and aims of the organisation. They are designed on the footing of certain factors and after analysing the work and occupation duties.
Aims of the Compensation Management System
A good compensation bundle plays an of import function in actuating employees and for the organisational productiveness.If the compensation is non provided a possible employee will be loath to work for the organisation. So the compensation bundle keeps the procedure running efficaciously.
Salary is merely a portion of the compensation system. The compensation system makes dialogue offers to the employee so that a certain set of footings and conditions can be agreed upon which suited for both employee and organisation.Competitive compensation system will pull and keep the new endowment.Compensation system is designed maintaining in position the budget and the fiscal abilities of the organisation, so it can be good for the organisation and maintains a balance between the working of all sections.
Appointment of Compensation Personnel
A lasting place should be created in organisation to develop, keep and reexamine the compensation system and do any alterations if required.
HR director will supervise the plan ; merely after his blessing, alterations would be implemented.For doing a compensation system advisers can be hired, who have studied the recent market, have knowledge about the chances and menaces and can assist the organisation in doing their ain compensation system maintaining in position the competition in the market. It is a erstwhile cost but can assist an organisation by acquiring new information and compensating on the footing of new selling attacks.
Company should counterbalance the employees on the footing of the market lead construct which is paying employees more than the standard wage degrees predominating in the market. It would be more attractive for new and gifted immature people. It could be look expensive in start but finally the organisation would profit from this scheme by acquiring net income due to effectual working and productiveness of the employees.
Heads of the different sections of the organisation should do up a compensation commission. They would execute following responsibilitiesReview the work of the adviser and give their recommendations.Discuss pros and cons of the recommendations.
Give the best recommendations to the advisers by negociating.Difference among the wages of the executives, professionals, employees, gross revenues employees and other workers should be. Executives should be paid for occupation public presentation and knowledge wage system. Other employees should be paid on the footing of accomplishments wage system. Gross saless employees should be given inducements and fillips if they win in selling more than the criterions defined in their occupation description.Benefits that are given to employees should supplement the hard currency compensation of the employee instead that replacing it.
Job description should be prepared before engaging the individual and it should include following subdivisions:Title of the placeDepartmentThe individual studies to whom straightOverall dutyKey countries of dutyTerm of employmentQualifications ( necessary accomplishments and experience required )
Job analysis is a systematic procedure for assemblage, documenting and analysing information in order to depict occupations.One of the chief ends of a compensation section is to advance internal consistence, which will clearly specify the comparative value of each occupation among all occupations within a company.
Job analysis and occupation rating are the tools that are used to keep internal consistence. It is necessary that the occupation analysis conducted should be dependable and valid.The division caputs will be involved in delegating the undertakings to their relevant section employees, they will merely see representative places as there are excessively many similar occupations to analyse. Interviews combined with questionnaire will be utile in carry oning occupation analysis. It will be good to utilize manuals depicting antecedently used occupation description inside informations so that it becomes clear if any alterations in responsibilities and duties have taken topographic point.The occupation officeholders every bit good as the supervision directors will be involved in the occupation analysis. It will besides be clearly communicated to them as to why they are take parting and what consequences this will give so as to avoid future disagreement and discontent.The Common Metric Questionnaire ( CMQ ) is an effectual tool which can be used for the intent of occupation analysis.
The CMQ is a standardised occupation analysis tool that was developed by RJ Harvey in 1987 to turn to many of the restrictions confronting occupation analysis studies and occupation ‘card kind ‘ tools. The CMQ is alone, in that all evaluation graduated tables and inquiries are behaviorally specific and focused on the measuring of discernible, verifiable, and replicable occupation behaviours. The CMQ is based on the thought that the universe of work can be measured along four general classs:InterpersonalDecision MakingMechanical and PhysicalWork ContextThe first class, Interpersonal Activities, is used to depict people related work activities, such as oversing and directing employees, covering with people internal and external to the organisation.The 2nd class, Decision Making Activities, includes determination doing about fiscal resources, human resources, operations, and equipment. In add-on, this class covers the usage of specializer cognition, accomplishments, linguistic communications and the five senses.Physical activities, such as walking, running, lifting, and forcing, and mechanical activities, such as utilizing computing machines, office equipment, stationary machines, tools, and vehicles, serve as the topic of the 3rd class of work features, Mechanical and Physical Activities.
Finally, the Work Context class covers the physical, societal, and other environmental features of occupations. Examples here include: working under inauspicious conditions conditions or on unstable or slippy on the job surfaces ; exposure to loud noises ; working in personally demanding state of affairss ; working under clip force per unit areas ; and the grade of control over work gait.The CMQ system provides you with several describing options with regard to occupation descriptions.
These studies include:Basic narrative study demoing item responses, and dimension mark profiles for a occupation.Administrative and developmental performance-rating signifiers for the occupation.Work-similarity study comparing several different occupations.Ratings-quality study examining, for a given CMQ point, how different raters within a individual occupation rubric produced different evaluations.At the most basic degree, we can bring forth studies that show the ‘scale mark ‘ ( to what extent is this activity nowadays in the function ) and a ‘percentile rank ‘ ( which shows the per centum of other occupations in the community which would be expected to hit lower on this dimension )After the completion of ( CMQ ) questionnaire and analysis of the consequences, develop a concluding bill of exchange of occupation descriptions, meet with section caputs to reexamine occupation descriptions and finalise and document all occupation descriptions.
In Job Evaluation process the worth of occupation is identified based upon occupation comparison and harmonizing to worth, importance of occupation and comparative value compensation is designed and selected.In order to measure occupations there is a demand to specify relevant paying factors which should fulfill two conditionsFactors must be occupation relatedFactor must foster the Bank ‘s schemeMultiple occupation rating techniques will be used for employees with different businesss and occupation household, because each of them will hold dissimilar usage of paying factors. A occupation rating commission comprising of a consensus of employees will be more good in footings of minimising prejudices.
The commission willbe cognizant of the intent of occupation ratingdo a documented program of rating for future mention and pull on the antecedently used and documented rating programsaffect employee in the procedure of occupation rating to guarantee understanding and credenceset up an employee entreaty procedure if necessary
The Hay System
The strategy determines, correlatives and evaluates the input or end product of a occupation. Input is measured in footings of the cognition and accomplishments ( professional, managerial and human dealingss ) required of the occupation holder in order to accomplish optimal public presentation. Output, both direct and indirect, is measured in footings of the jobs and employee is required to work out and his relationship to fiscal consequences achieved.For any given occupation, there will be a relationship between the undermentioned three factors. The end product or stop consequences expected from the occupation ( the Accountability ) will demand a certain degree of input ( Know-how ) and processing of this Know-how ( Problem Solving ) to enable bringing of the end product.
Job Content Evaluation Technique
Job content rating programs emphasize the company ‘s internal value system by set uping a hierarchy of internal occupation worth based on each occupations function in company scheme.
Based on the bank ‘s scheme Job Content rating technique is appropriate for them.
For public presentation assessment following methods are more appropriate for Bank Alfalah.Behaviorally Anchored Rating Scales: This method focuses on specific occupation behaviours and encourages all raters to do rating in same manner which will cut down prejudices.
Management by Aim: Management by nonsubjective promotes the effectual communicating between supervisors and employees. This helps in specifying the ends for employees and for directors to measure them consequently.360 Degree Feedback: This method is based on taking feedback from all the entities involved in work environment included the employee and helps the organisation to develop a complete apprehension of an employee ‘s public presentation.
DEFINING Wage STRUCTURE
Number of Pay Structures
Depending on markets rates and company ‘s occupation construction Bank Alfalah should set up more than one wage construction. Bank Alfalah should follow exempt wage construction and pay construction based on geographics.
Jobs at Bank Alfalah are by and large professional, managerial or executives that have broad assortments of responsibilities so that is the ground it should follow exempt wage construction.As different occupation households exist in the organisation, it should besides follow wage construction based on occupation households that show a vary wage form in the market.As Bank Alfalah operates in different metropoliss so, it should besides follow wage constructions based on geographics because local conditions influence wage degrees and salary rates can be different in different parts.
Determining Market Pay Line
Bank Alfalah is set uping competitory advantage by following a diffrentiation scheme. Islamic banking, now runing as a portion of Bank Alfalah, will be separate bank in a few months. As organisation is traveling for distinction scheme, market lead policy is appropriate for them.
Specifying Pay Grades
Based on paying factors and direction ‘s doctrine, broad wage classs are suited for the organisation that will minimise the hierarchy and societal distance between employees and directors.
After make up one’s minding figure of classs, wage scopes for each class should be defined. Pay ranges include minimal, mid and maximal wage rates. As organisation would set up market lead policy, mid points would be higher than the market norms of similar occupations.If organisation hired an employee who does non run into minimal demand in work specification, he/she should be paid at green circle rates but they should be brought to normal wage scopes by extinguishing the lacks in accomplishments or experience.By paying at ruddy circles pay rates valuable employees can be retained who have other chances in occupation market.
COMPARISON OF IDEAL AND EXISTING COMPENSATION SYSTEM
The occupation description should be developed before hiring of employees and should be efficaciously communicated to them. In Bank Alfalah freshly hired employees are given a basic lineation of their occupation description and it is a requirement that they add undertakings and assignments to that occupation description for themselves every twelvemonth so as to last and come on in the organisation.The employees hired have certain insecurities every bit far as their public presentation is concerned.
Bank Alfalah requires that they introduce a new undertaking every twelvemonth which is good for the organisation. Although it is a good technique to promote employee engagement and bring on trueness towards organisation, it can nevertheless go burdensome for the employees as they have to acquire the undertakings approved by the direction and so execute the undertakings mentioned in their several occupation description every bit good, which leads to a sense of occupation insecurity.During occupation analysis employee feedback is every bit of import as any other factor. In Bank Alfalah, nevertheless, the occupation analysis procedure comprises of observation and interviews merely. Employee feedback is non a portion of occupation analysis procedure.Bank Alfalah uses exempt wage constructions every bit far as managerial, supervisory and executive places are concerned. This is harmonizing to the Fair Labor Act.
Wider wage classs have been adopted by Bank Alfalah that minimizes the hierarchy and societal distance between employees.
Although compensation system of Bank Alfalah is effectual and harmonizing to their strategic way, there is still room for betterments. The compensation system in conformity with the organisation ‘s regulations and benefits and employees feel that equity and occupation security is unpredictable. Job description should be prepared and documented before engaging. Job rating procedure is rather extended but lack employee entreaty procedure.
Wider wage classs exist which are appropriate for the organisation.
Military officers and directors should hold different occupation descriptions as they have to set about different undertakings, director being merely involved in direction.Use of Common Metric Questionnaire ( CMQ ) as a occupation analysis tool will be more good as it is less troublesome being an online installation and it is less dearly-won compared to hiring of a professional external perceiver.A occupation rating program should be documented and a proper rating commission should be to oversee and carry on it.An employee entreaty procedure is a necessary portion of the occupation rating as it helps in keeping good employee-management dealingss.
It should allow reappraisal of employee rating on instance by instance footing and supply a cheque of the procedure through re-examination. Most companies do non trouble oneself to put up an entreaty procedure which is perceived by employees as unfair.Bank Alfalah being a undertaking of an international group of investors, the Abu Dhabi group, has sound fiscal support. Market lead policy is more appropriate for them because they will so be able to take best appliers from the available pool and they can besides prosecute distinction as an organisational scheme.